Listed Property group Balwin says that demand for its developments remains strong, despite the strain brought about by the Covid-19 pandemic and nationwide lockdown.
The group noted in its results for the six months ended August 2020, that the local property market continues to take strain, despite the South African Reserve Bank (SARB) cutting the interest rates to prop up the local economy.
“Despite the welcome interest rate relief through the 275 basis point reduction in lending rates since the commencement of the financial year, market conditions remain challenging for the consumer,” it said.
“In response, Balwin has continued its marketing campaigns to clients to continue to drive sales where necessary with the reduced selling prices enabled by the healthy margins generated by the business.”
The government implemented a national lockdown on 26 March, which stopped all construction until 1 June. Balwin said it launched an online sales platform during this time, selling 350 properties in the first nine-weeks of lockdown. The group said it will continue with this strategy.
In the reporting period, Balwin handed over 896 apartments (H12020: 1,309 apartments) – a 32% year-on-year decline. Future-looking demand remains strong, it said, adding that 2,466 sales were recorded in the reporting period, and 1,667 apartments have been pre-sold beyond the reporting period.
“This represents an increase of 685 apartments forward-sold when compared to the prior corresponding reporting period and underscores the sustained demand for the Balwin product,” Balwin said.
But council-related delays such as registering apartments continue tohamper the group. Balwin said it was not able to register 487 apartments by period end.
“These delays have been heightened as a result of the Covid-19 pandemic with closure of council and deeds offices being a frequent event,” it said.
The group continues to build one- and two-bedroom apartments which made up almost three in every four (74%) of apartments sold.
Salient features for the six months ending 31 August:
- Revenue decreased by 35% to R930 million;
- Profit dropped by 56% to R81 million; and
- Headline earnings per share (HEPS) shrunk by 56% to 17 cents per share.
The board declared an interim gross dividend of 19.6 cents per ordinary share (H12020: 11.7 cents). This includes the previously deferred dividend for the year ended 29 February 2020, Balwin said.
It said that, while it remains apprehensive over the prevailing macro-economic climate and fiscal policy uncertainty in South Africa, it is positive on the resilience of its products – as demonstrated by the sustained demand by customers.
As part of its portfolio, the group is currently overseeing the development of 62,000 apartments in its pipeline, across 25 different projects in Johannesburg, Tshwane, KwaZulu Natal and the Western Cape.
Completion dates range from October 2020 to November 2030.
Among its recently-announced projects is the R84 billion Mooikloof Mega-City, which will be built in the east of Pretoria. President Cyril Ramaphosa launched the development on 4 October, and is one of the 62 Strategic Integrated Projects (SIPs) gazetted at the end of July.
While the commencement date and conditions for the project are yet to be detailed, this development is expected to be completed in November 2030, Balwin’s pipeline shows.
The group said it plans to build an initial 16,000 apartments at a present value of approximately R9.6 billion in phases over the next few years.
Balwin is also known for its “beach in the city” developments, which are constructed around large lagoons. The group said it remains committed to this “unique lifestyle offering” and the opportunity to expand on its partnership with Crystal Lagoon to bring the beach life to clients.